Markets this week: Sensex gains 2.4%; L&T, Tata Power surge

Mumbai: September is turning out to be a good month for Indian shares, as key stock indexes extended gains in the last four sessions. Monday was a market holiday.

The BSE Sensex gained 2.4 percent, while the broader Nifty rose nearly 3 percent as foreign institutional investors (FIIs) extended buying into Indian equities. A recovery in the rupee, which posted its best week in 15 months, also boosted sentiment.

Profit-taking dented markets mid-week as caution also prevailed ahead of a series of macroeconomic events scheduled next week, including August inflation data due on Monday and the likelihood of US Fed’s decision to announce a reduction in its monetary policy stimulus. RBI will review its policy on September 20.

Here are the top gainers and losers of the week:

GAINERS

Larsen & Toubro (L&T): Shares of India’s largest engineering and construction conglomerate surged during the week, ending 10.6 percent higher as the best Sensex performer. The stock outperformed the BSE capital goods index during the same period, which rose 8 percent.

On Friday, capital goods shares gained after data on Thursday showed industrial production unexpectedly rebounded in July. Capital goods production rose for the first time in four months in July, posting annual growth of 15.6 percent.

Goldman Sachs has added L&T to its ‘conviction buy’ list, citing attractive valuations, visible growth, strong balance sheet and a good track record of execution. Of the 47 analysts covering L&T, 34 have a ‘buy’ or equivalent rating on the stock, according to Thomson Reuters data.

Tata Power: Having lost nearly 30 percent in 2013, the power company’s shares closed 10.4 percent higher in the week ending September 13.

Moody’s said on Thursday the utility firm is among the companies that could see the quality of its debt fall as higher borrowing costs and weaker rupee hurt. But S&P had downgraded the stock last week on weak cash flows with a negative outlook.

Analysts seem to be divided on the stock. Of the 36 analysts covering the stock, 18 have a ‘buy’ or equivalent rating and 11 recommend a ‘hold’.

Mahindra & Mahindra (M&M): Shares of India’s biggest utility vehicle manufacturer gained 7.6 percent in the week. The stock has struggled of late and is still down 14 percent since July.

Earlier this month, M&M reported a 28 percent slump in its domestic sales in August. India’s auto sales are forecast to remain in the negative in FY14 even as car sales rose 15.4 percent last month, the first gain in ten months.

Sun Pharma: Shares of India’s top drugmaker by market value added 6.6 percent to their value, taking its yearly gains to 53.2 percent. Of the 40 analysts covering the stock, 29 recommend a ‘buy’ or equivalent, data showed.

Hero MotoCorp: Shares rose 6.4 percent in the last four trading sessions. Since July, the stock has surged 23.5 percent as compared to a 2.1 percent rise in BSE auto index.

Earlier this month, the company reported a 4 percent increase in sales in August. “Going forward, the industry expects sales to pick up further on account of the good monsoons and the festive season. We are confident of sustaining this positive momentum in the coming month with a slew of launches from us heading into the festive season,” Anil Dua, Hero MotoCorp’s senior executive had said.